26 April 2019 16:33:56 IST

A long-time ‘deskie’, Baskar has spent much of his journalism career on the editorial desk. A keen follower of economic and political matters, he likes to view economic issues from a political economy lens as he believes the economic structure of a society is deeply embedded in its political and social ethos. Apart from writing the PolitEco column for BLoC, Baskar writes book reviews and articles on politics, economics and sports for the BL web edition. Reading and watching films are his other interests, though the choice of books and films are rather eclectic.  A keen follower of sports, especially his beloved Tottenham Hotspur FC, Baskar is an avid long-distance runner.  He hopes to learn music some day!

Whatever happened to the Gujarat model?

The BJP’s silence on this much-touted success story seems curious

We are in the middle of the 2019 Lok Sabha polls, in which elections to 303 of the 543 Lok Sabha seats are already over. The next phases of polling will see the major political parties fighting it out for the remaining 240 seats in politically-sensitive States such as Uttar Pradesh, Bihar and Bengal.

The ruling BJP has so far relied on the time-tested nationalism narrative that has gained greater momentum since the Pulwama terror attacks and the subsequent Balakot air strikes. Nominating Sadhvi Pragya Thakur Singh for the Bhopal Lok Sabha seat to fight the Congress’ Digvijaya Singh is a clear signal of the ruling party’s strategy.

There is one topic, however, that is glaringly absent in the BJP’s poll narrative this time — the Gujarat model of development. In the run-up to the 2014 Lok Sabha elections, Gujarat was a hot topic, and its perceived success or lack of it was hotly debated — both in the media and among politicians and economists.

Gujarat vs Kerala

In 2013-14, two of India’s top economists — Amartya Sen and Jagdish Bhagwati — were engaged in a very public, often vitriolic, spat over the Gujarat vs Kerala model of development. In a broad sense, the Gujarat model privileges growth and infrastructure development. The underlying logic was that growth and industrial development will play a bigger role in reducing poverty.

The Kerala model, on the other hand, favoured a rights-based approach to development, with a strong emphasis on social and human development. Bhagwati was a strong votary of the Gujarat model, and Sen a believer in the Kerala model.

The historical realities of each State, no doubt, made Kerala and Gujarat adopt a unique model suitable to its needs. Gujarat always had a strong entrepreneurial history, that made industrial development easier to achieve. In Kerala, the focus on education and public health began right from the time of the Travancore rulers, in the colonial and pre-colonial eras.

Too high a price

However, in 2014 the Gujarat model was touted as a panacea for all of India’s economic problems, and Narendra Modi had vowed to replicate it in other parts of the country. In the context of the ‘policy paralysis’ under UPA-II, this argument gained traction among the voters and even sections of the media.

The Gujarat example has itself come in for greater scrutiny by both academics and the media in recent years. Despite the State’s success on the industrial front and infrastructure, its poor record in social development is by now well documented. And it is being debated whether Gujarat’s push towards ‘big’ industries in the last decade-and-a-half may have come at too high a price.

French academic Christophe Jaffrelot, in a recent paper, featured in the book Business and Politics in India , edited by Jaffrelot, Atul Kohli and Kanta Murali, traces the history of Gujarat’s industrial development over the last five decades. Gujarat has always been one of India’s better-performing States, with a higher than average growth rate and State GDP.

Slant towards big business

The State always had a strong entrepreneurial culture and, even under the state-led ‘Nehruvian socialist’ system, was more business-friendly. In fact, in the 1980s, Jaffrelot mentions that the then State Chief Minister, Madhavsinh Solanki of the Congress, had promised to turn Gujarat into a “mini-Japan”.

But in the 1970s and 1980s, the State’s industrial development was driven by small and medium scales industries (MSMEs). This not only generated a lot of jobs but also led to high growth. This policy, according to Jaffrelot continued in the 1990s, even after India opened up its economy in 1991. But by the late 1990s the State’s industrial policy started tilting towards big business, a slant that became more pronounced after Narendra Modi became Chief Minister in 2001.

Jaffrelot gives a detailed account of how Modi courted big business to invest in Gujarat by providing an enabling environment. Generous tax breaks and easy land acquisition were the two important sops offered to industry. The speed with which the Gujarat government invited the Tata group to set up its Nano plant in the State, after it ran into trouble in West Bengal, is well-known now.

The economic price

The mega investment summit, Vibrant Gujarat, received much media coverage and further burnished Modi’s image as a pro-business leader. India’s top business leaders were effusive in their praise for Modi.

But Jaffrelot argues that there was a flip side to all this. The massive sops offered to industry impacted the exchequer as the State had to forego revenues, leaving it with little money to spend on social sectors.

There were two other important effects of the big industry push too. One, employment generation fell, and two, the State’s indebtedness increased — a fact that was not debated earlier. So the much-touted Gujarat model came with not only a social price but an economic one too.

The Gujarat success story seems like history now. Five years later, the narrative in the 2019 elections is shaped around the BJP’s ‘nationalism’ as opposed to the Opposition’s rather fuzzy ‘idea of India’.